Why Global Capital Is Looking at India Differently This Year

Why It Matters

By coupling high growth with transparent, digital‑first governance, India offers investors a rare combination of scale and stability, reshaping capital allocation toward the country. Successful execution will determine whether this perception translates into sustained foreign inflows.

Key Takeaways

• GDP growth >6.5% this fiscal year
• UPI processes 12+ billion monthly transactions
• GIFT City tax holiday extended to 20 years
• Digital infrastructure reduces risk assessment friction
• Data governance vital for long‑term investor confidence

Pulse Analysis

India’s macro backdrop is increasingly attractive to overseas capital, not merely because of headline growth numbers but due to a digital backbone that underpins economic activity. The Unified Payments Interface now processes more than 12 billion transactions monthly, while the Open Network for Digital Commerce and Account Aggregator frameworks streamline credit assessment and financial inclusion. This digital scaffolding narrows information gaps, cuts operational friction, and provides a reliable data set that investors can trust when pricing risk.

The Union Budget’s focus on GIFT City amplifies the narrative of long‑term capital attraction. By doubling the tax holiday to 20 years and fixing a 15% corporate rate—significantly lower than the national average—the government signals fiscal certainty for global reinsurers and balance‑sheet‑intensive institutions. Coupled with a ring‑fenced regulatory regime aligned with international standards, GIFT City is positioned as a gateway for foreign funds seeking stable, predictable returns. Execution will hinge on supervisory consistency, transparent governance, and seamless integration with global financial protocols.

Beyond policy, India’s competitive edge lies in its talent pool and data governance. A growing cadre of engineers, data scientists, and finance professionals fuels the development of AI‑driven, audit‑ready financial systems. As data evolves from a by‑product to core infrastructure, the ability to safeguard data flows and ensure accountability becomes a decisive factor for investors. If India can harmonize its digital innovation with rigorous oversight, it will cement its status as a durable, globally integrated financial hub, attracting capital that is allocated over decades rather than quarters.

Why global capital is looking at India differently this year

By Varun Chojhar, ET CONTRIBUTORS · Last Updated: Feb 20, 2026, 10:22:00 AM IST

India's economy is strengthening through digital infrastructure and mature regulations.

As global markets contend with compounding risks and fragmented growth, India has steadily built a platform of economic resilience rooted in digital infrastructure and growing regulatory maturity. The latest Union Budget reinforces that this trajectory goes beyond the aspirational – increasingly, it is codified through long‑horizon institutional choices. These are shaping growth expectations and, moreover, how India itself is priced by global capital. Increasingly, the term ‘emerging market’ feels misaligned with India’s position in the global architecture of financial markets.

International investors looking at India can find confidence in India’s macroeconomic performance, which has held steady amid global volatility, with GDP growth expected to exceed 6.5 % this fiscal year. It has been a rare consistency in a world of downward revisions. Beyond the numbers, what stands out is the foundation underneath: interoperable digital public infrastructure, credible regulatory institutions, and a deliberate effort to link transparency with innovation. This is not simply a story of expansion, but of governance reinforced through policy continuity.

For financial markets, the convergence of digital and financial infrastructure has been particularly consequential. The Unified Payments Interface, now processing more than 12 billion transactions a month, has demonstrated that scale and security need not be mutually exclusive. The Open Network for Digital Commerce and the Account Aggregator ecosystem represent deeper architectural shifts in how economic participation is recorded, verified, and financed. Together, they are reshaping how risk is assessed, how credit flows, and how trust is embedded into market systems.

These layers of digitisation are increasingly informing how foreign investors perceive Indian risk, narrowing information gaps and reducing operational friction. Even so, this domestic scale doesn’t translate directly into global compatibility. The next phase of reform lies in ensuring that India’s interoperability extends outward. This entails aligning with international data regimes, regulatory frameworks, and financial protocols. This is the shift from inclusion to integration, and it is where India’s institutions will face their most exacting test.

One testbed for this evolution – and one clear opportunity for innovation – is GIFT City, Gujarat’s International Financial Services Centre, which is increasingly seen by global investors as a successful, competitive financial zone outside Mumbai’s legacy ecosystem. The Union Budget has materially strengthened this effort, doubling the tax holiday for new businesses in GIFT City to 20 years and committing to a flat 15 % tax rate thereafter, compared with nearly 35 % elsewhere in the country. The intent is clear: to attract long‑duration international capital, particularly global reinsurers and balance‑sheet‑intensive financial institutions, by offering fiscal clarity and regulatory certainty.

More than a tax incentive, this is a structural signal. By ring‑fencing a globally aligned regulatory and tax regime, India is acknowledging that international capital operates on different time horizons and risk models than domestic finance. Some of the world’s biggest reinsurers have already set up operations in GIFT. A development that is often seen by market participants as a useful barometer, as it involves large, long‑term commitments of capital and tends to gravitate toward jurisdictions where regulatory rules are stable and predictable.

So while capital inflows have already started, GIFT City’s success will be judged by execution: supervisory consistency, operational transparency, and convergence with global standards.

In this environment, data is no longer a by‑product of economic activity; it is becoming its infrastructure and the fuel. India’s ability to govern data flows, ensure auditability in increasingly AI‑driven financial systems, and maintain accountable oversight will shape investor confidence as much as fiscal or monetary signals. Tax certainty may attract entry, but data integrity and regulatory credibility determine permanence. For global financial institutions, trust is built through systems that are predictable, transparent, and enforceable across cycles.

India’s demographic dividend adds a further layer of momentum. A deep and increasingly sophisticated pool of engineers, data scientists, and market professionals trained across the country’s leading institutions and tested at scale has translated technological capability into financial credibility. This human capital is central to how financial infrastructure is built and sustained.

Market depth is a starting point; market durability is the next step. As global capital searches for destinations that combine growth with governance, India can offer an institutional blueprint in which systems are transparent by design, scale is digital‑first, and reform is continuous rather than episodic. The Union Budget’s emphasis on long‑dated commitments signals an understanding that a significant portion of global capital is allocated by decades, not quarters.

India is entering the most consequential phase of its financial transformation in decades, building on a long arc of liberalisation and regulatory strengthening. What matters now is disciplined execution: translating policy intent into consistent outcomes, harmonising digital innovation with supervisory rigour, and ensuring that India’s expanding market interfaces inspire confidence across cycles. A data‑driven, globally engaged financial ecosystem is not only ready to scale—it is ready to integrate.

(The author is Head of Bloomberg – South Asia)

Disclaimer: The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.